Wednesday, July 26, 2017

DOF limits PSALM borrowings to P15 B

Being its main supervising agency,
the Department of Finance (DoF) has already given go-signal on P15 billion
worth of borrowings for Power Sector Assets and Liabilities Management
Corporation (PSALM), just enough to pay off maturing debts.

PSALM Officer-in-Charge Lourdes S.
Alzona indicated that their proposal was actually for P30-billion loan which
also secured prior approval of the company’s board.

But she qualified that the finance
department only “cleared the amount of P15 billion in order for PSALM to just
service debt maturities this first semester.”

Finance Secretary Carlos Dominguez
III who sits as chairman of the PSALM Board told media about the state-owned
company’s dire need to resort to fresh round of borrowings because of the
snarled approval on its application for universal charges (UCs) – all set for
collection as pass-on charges in the consumers’ electric bills.

PSALM has been painstakingly waiting
for the approval of its UC petitions on cost recoveries for stranded debts and
stranded contract costs, but delayed regulatory actions tend to stifle targets
of getting the state-run firm at least financially afloat to meet obligations
falling due.

Alzona hinted that if the UC pass-on
may still not be decided this year, the company’s last option would be another
round of loan procurement.

“Additional borrowing may be
resorted to if these other receipts (prospective UC collections) do not
materialize,” she said.

Alzona added that “while PSALM is
focusing continuously on collection of receivables, it is looking on its
pending rate recovery applications with the regulatory body as PSALM’s other
source for the 2017 funding requirement.”

The state-run firm has close to P100
billion worth of UC recoveries that could substantially shore up its financial
capacity to settle maturing obligations. However, regulatory gridlocks on its
applications to recoup warranted costs are way beyond its control.

UC for stranded debts account for
costs that cannot be recovered from the privatization proceeds of the divested
National Power Corporation (NPC) assets; while those on UC stranded contract
costs represent the portion of the contract costs with the independent power
producers (IPPs) that cannot be recouped with the restructuring of markets.